Jakarta, Indonesia – Indonesian suppliers have postponed at least 310,000 metric tons of palm oil shipments from November to December, betting that a recent slide in prices could prompt Jakarta to reduce its export tax by more than $50 per ton, according to sources from trading houses and plantation companies.
The deferred shipments, representing roughly 12% of typical monthly exports, are expected to be shipped in the first week of December, boosting domestic stockpiles ahead of the holiday period. Indonesia typically exports around 2.5 million tons of palm oil per month.
The move could lift December exports, a month when shipments usually decline, and support benchmark palm oil prices on the Bursa Malaysia, which recently fell to a four-month low due to rising production in Malaysia. Indonesia and Malaysia remain the world’s top producers of palm oil, a commodity widely used in products from ice cream to soap, and favored in Asia over alternative oils such as soybean or sunflower oil.
Market expectations are that December export duties could be cut by more than $50 per ton, prompting sellers to defer shipments from late November to early December to take advantage of the lower levy. Indonesia set its November crude palm oil (CPO) reference price at $963.75 per ton, resulting in an export tax of $124 per ton. The December rate is expected to be announced before the start of the month.
The Indonesian trade ministry sets the monthly reference price based on average international CPO prices and collects levies to fund the country’s national biodiesel program, ensuring the mandatory biodiesel blending policy remains economically viable.
Such large contract deferrals are rare in the palm oil trade. Sandeep Bajoria, CEO of Sunvin Group, a Mumbai-based vegetable oil brokerage, noted that over 100,000 tons of palm oil destined for India were deferred from November to December. This could raise India’s palm oil imports to around 750,000 tons in December, up from 650,000 tons in November. India is the world’s largest palm oil importer.